The Biggest Supply Chain Challenge Facing Food and Beverage Companies

The Biggest Supply Chain Challenge Facing the Food & Beverage Industry

Rising Customer Expectations Present Biggest Challenge for the Food & Beverage Industry

Changing consumer shopping habits and rising customer expectations are putting added pressure on the food and beverage industry. Shoppers are becoming used to having dozens of choices at their fingertips. Whether this is a choice between multiple flavors and varieties where there might have once only been, or the choice to purchase groceries online, at a traditional grocery store, in a convenience store, or any other location, there are more options than ever. This presents a big challenge for food and beverage companies that need to support more SKUs and deliver to more retail locations.

Consumers Are Demanding More Convenience From Their Grocery Shopping

Gone are the days when everyone made a single trip to their local grocery store to purchase the same list of weekly groceries. While some people still maintain this habit, it’s becoming increasingly common for people to shop for food at a variety of locations. Shoppers often want to grab a loaf of bread of a gallon of milk while they go about their busy lives. This means many different retail locations have the opportunity to draw in shoppers by offering an assortment of essentials. Convenience and pharmacy locations like CVS and Walgreens have jumped on this bandwagon, expanding their grocery sections to include more shelf-stable and frozen products. Big box stores like Target and Wal-Mart as also capitalizing on this trend.

Online shopping is growing in popularity across all industry and it’s no different for food and beverage. There are now hundreds of options for shoppers to order ahead to pick-up in store or at a special location as well as have groceries delivered directly to their door. This is not to mention to rise in popularity of meal subscription services which take the planning out of meal prep.

These new ways for consumers to shop for their groceries adds a new level of convenience, but also comes with many challenges for food and beverage supply chains. Instead of just delivering to the dock of routine grocery stores, now manufacturers have multiple lanes to multiple retail locations to fulfill. Juggling the increasingly complicated routing as well as inbound delivery restrictions can be a challenge for food and beverage manufacturers.

Consumers Want More Options than Just Chocolate or Vanilla

In years past, many common grocery items came in only one or two varieties. Soda came in one or two sizes and in standard flavors, yogurt was strawberry, vanilla or plain, and burgers were simple beef patties. Now, these and many other products and categories come in a multitude of flavors and options! When you walk into the dairy aisle of a grocery store these days, you’ll find yourself confronted by a wall of yogurt types. Soda comes in different sized containers and you can find diet options, natural and organic, and even foreign brands. Burgers have transformed from just simple beef patties to an entire food category of their own encompassing meat-free options, health-conscious choices, and even different proteins like chicken and mushroom.

Brand loyalty is also a fading trend. With the advent of the internet and easy ways to compare products as well as learn about new ones, shoppers are more willing to try something new or quite a brand that has disappointed them. As such, manufacturers are now constantly working to maintain their customer base and offer new and more exciting options.

While these new flavors and varieties cater to consumers’ new expectations and shopping habits, adding more SKUs to any product presents challenges for food and beverage manufacturers. Considerations like shelf-life and seasonality need to be factored in as well as where different products are manufactured. Instead of shipping a truckload of a few products from one location, manufacturers may find themselves shipping more LTL from multiple zip codes.

Keeping store shelves full also presents an issue for demand planning teams. Shelf space and backroom space are at a premium, meaning replenishment from the manufacturer needs to happen in smaller batches more frequently in order to keep shelves stocked. Consumers are more willing than ever to buy from a competitor rather than visit another store for the brand they prefer and this can be a risk for manufacturers with a growing SKU list.

How Transportation Management Technology Helps Food & Beverage Companies Face These Challenges

Food and beverage businesses have complex supply chains with many unique characteristics: tight margins, fresh products that may spoil, expiration dates on products, complicated inbound requirements and more. On top of these challenges are industry issues that center around the lack of carrier capacity, shortage of truck drivers and increased regulations and compliance requirements.

Getting the right volume of products at the right time, and at the right location, is no easy task. Visibility into and control of supply chain processes will allow food and beverage businesses to address rising customer expectations all while meeting business goals.

Transportation management systems like Kuebix TMS can help food and beverage companies face the challenges of increasingly complicated supply chains due to rising customer expectations. With features like rating, booking and tracking all from within a single system, any company can save countless hours and realize real, bottom-line benefits by comparing all their rates side-by-side. With added features like ERP integrations and collaboration portals, communication between systems and partners becomes seamless and issues can be avoided before they even begin. Dock scheduling and yard management features help manufacturers keep their supply chains moving so that products don’t spoil and products reach stores with the maximum amount of shelf life.

By incorporating technology into everyday operations, food and beverage companies can address the challenges created by rising customer expectations, save time and improve their bottom lines all at the same time.

Grocery Food Supply Chain Kuebix TMS

Rising Consumer Expectations are Prompting Change in Food Supply Chains

The food industry is no stranger to steadily rising consumer expectations and standards. It’s becoming increasingly normal for consumers to shop for food in a variety of ways. Whether they stop at the grocery store to grab a frozen pizza on their commute home, order delivery upon arrival, or subscribe to a delivery service, there’s no shortage of ways consumers are shopping for food. Customer loyalty also seems to be a thing of the past, with many shoppers jumping from brand to brand and flavor to flavor as the mood takes them. For food suppliers, this means getting their products into the hands of their customers whenever and wherever they want, making supply chain operations increasingly complex.

The “Food Anywhere” Trend

Supermarket prepared food departments have seen double-digit sales growth in recent years, and food delivery is expected to grow 12% every year for the next five years. This aligns with the food anywhere trend, which challenges traditional ideas about availability and requires suppliers to conform to consumers’ notion that food should be able to be enjoyed anywhere at their convenience. Now, consumers expect to be able to purchase some traditional groceries at their local pharmacy, have pre-portioned meal kits delivered to their doorways, or order online for pickup at the location of their choice. Regardless of location, consumers expect their food to maintain the same quality and taste. Achieving this standard while keeping products in stock can be quite challenging for many food manufacturers.

Transporting food to local vendors for distribution is just as complicated as keeping up with all the final mile options consumers have come to expect. Trucking companies with food-grade truck assets must conform to extensive rules and regulations that ensure food is transported safely from one point to another. Even the smallest misstep can lead to degradation in the quality of the food and render products unsellable. Potential roadblocks to take into consideration include the distance being traveled, the temperature within the truck itself and the risk of cross-contamination depending on what products are being transported together. Drivers need to be aware of FDA, USDA, and DOT regulations in order to ensure products arrive at their destinations in a sellable and safe condition.

Healthier Alternatives

Manufacturers of prepared foods are struggling to meet demands for fewer, healthier ingredients while maintaining the same taste and texture customers expect. This can cause issues in the longevity of prepared foods, leaving products with shorter shelf-lives all while consumers are requiring more variety.  

However, change does come with reward – 73% of consumers are willing to pay more for a “clean label” product. Some food manufacturers have turned to individual quick freezing technology (IQF) to help achieve this standard while still retaining longer shelf-lives. This is a process that is growing in popularity because it flash-freezes products and preserves their nutritional value. The ice crystals created from IQF are small enough that they don’t rupture the cell walls of the products, extending shelf life and reducing food waste because consumers can cook in portions and keep unused leftovers frozen. This may be a compromise for food manufacturers and consumers who demand options, accessibility and health from their food.

Meeting Consumer Expectations With Technology

Food manufacturers have complex supply chains with many unique characteristics: tight margins, fresh products that may spoil, expiration dates on products, complicated inbound requirements and more. Getting the right volume of products at the right time, and at the right location, is no easy task. Visibility into and control of supply chain processes will allow food suppliers to address these challenges while meeting business goals. 

The best way to handle the complexity of transporting such intricately manufactured products is by using technology that provides complete visibility and control of supply chain processes like Kuebix TMS.  Food and beverage companies can use Kuebix TMS to seamlessly rate, book and track their freight. Through the direct integration of purchase orders from ERP systems into the TMS, companies can save time and improve order accuracy, ensuring that their customers’ growing expectations are met.

Amazon Prime 1 Day Shipping Kuebix

What Amazon’s One-Day Delivery Promise Means for Supply Chains

Amazon is once again raising the bar for speed of delivery with its announcement that the company’s new goal is to make 1-day delivery standard for Prime customers. Amazon’s 2-day free shipping guarantee has already had huge implications on supply chains, so much in fact that the term the “Amazon Effect” was coined just to describe it.

The Amazon Effect is a trend where customers expect incredibly fast delivery, full visibility to tracking information, and great customer service because of the experience they get with Amazon Prime deliveries regularly. Customer expectations have increased because Amazon has proven it’s possible to deliver products in just 2 days, and to do it for free.

How Does Amazon Plan to Make 1-Day Delivery a Reality?

Amazon has laid out an aggressive strategy to make their 1-day standard delivery promise a reality. The company has announced that they will be greatly expanding their Delivery Service Partner program by incentivizing current employees to open their own package delivery businesses. Current employees will be offered $10,000 and three month’s pay to open their own delivery business, greatly reducing the risk and difficulties associated with staring a new company.

By removing many of the barriers to entry, Amazon hopes to expand the number of available trucks to deliver final mile packages across the country. With more available capacity to hand, Amazon will be able to get products to end customers faster. According to Amazon, entrepreneurs who take advantage of this new incentive program will have access to logistics technology, insurance, and support to be successful. Delivery partners who expand their fleets to 40 vehicles can earn as much as $300,000 in annual profits.

As Amazon increasingly replaces human labor in their warehouses with technology, this is also a strategy to move employees into new, fruitful positions with upward mobility. Many employees who may find their jobs in jeopardy of being replaced by robots can make the switch now to being delivery partners. Amazon is not only encouraging current employees to begin final mile shipping operations; the company will also be reimbursing military veterans up to $10,000 to start their own programs.

What Does This Mean For Companies With Their Own Supply Chains?

Customer expectations are about to rise again. Companies with freight to ship will need to work even harder to deliver superior customer experiences without going into the red. Every business will need to emphasise fast shipping and complete shipping visibility in order to compete with the outstanding service Amazon provides its customers.

What Can Companies Do to Keep Up With Increasing Customer Expectations?

Companies need to leverage network-based technology like Kuebix TMS to optimize their supply chains and connect to the greatest number of opportunities to collaborate with other businesses.

It isn’t feasible for most companies to create their own extensive private fleets like Amazon is doing with its Delivery Service Partner program. Instead, businesses need to connect with capacity already available in the industry to find opportunities to cut back on costs and improve speed of delivery.

Programs like Kuebix Community Load Match help shippers quickly and easily connect to a vast ecosystem of dedicated truckload carriers. Through Community Load Match, shippers can receive spot quotes and book loads without needing to pick up the phone.

Amazon is expanding their network by incentivizing employees to create delivery services. Other shippers can expand their networks by leveraging Kuebix to access new, valuable sources of capacity alongside their negotiated carrier rates.

Final Mile Kuebix

The High Costs of Final-Mile Delivery

The final mile of delivery is said to be the most expensive portion of the equation. BI Intelligence equates the share of the total cost of shipping for the last mile at 53 percent of delivery costs overall.

It is costly because it has a larger human element than the other segments of transportation with drivers going door-to-door to drop off packages. In an urban environment, the distance between deliveries can be a couple of flights of stairs, but in a rural scenario, drivers may have to drive miles and miles before they get to their next drop-off point.

If the last-mile delivery experience is poor, such as a package arrives damaged or is left out in the rain, then this can have a negative impact on a company’s brand. Sometimes deliveries have to be made several times because the recipient was not at home and the delivery requires a signature; this hikes up the delivery costs even more.

In some instances, the final mile delivery is the first personal contact between the consumer and the product. If the delivery is poor, then the brand is affected. Was the driver late? Is the packaging damaged? Was the delivery person rude? With customer expectations so high, a lot is at stake if a delivery goes awry.

The last-mile is expensive, inefficient and risky (for a firm’s reputation) – yet people want that “Amazon Experience” where they can track their package via a mobile phone app, with alerts if the package will be delayed and notices when a package has arrived. This type of transparency requires visibility and real-time tracking of orders.

Says Business Insider, “The costs and inefficiencies of the last mile problem have only been further compounded by the continuous rise of e-commerce in US retail sales, which has dramatically increased the number of parcels delivered each day, as well as raised customer expectations to include not just fast, but also free, delivery.” In other words, the issues surrounding the last mile are not going away.

So, what can you do?

Companies can ensure that their organization has complete visibility to any delivery delays, exceptions or missed appointments with the use of technology. Whether a company is delivering to a residence or business; utilizing owner operators or asset-based fleets; or is delivering a unique one-time shipment with a rate from the spot market, a transportation management system can help.

Customer Service Kuebix Transportation

Importance of Customer Service in Transportation Operations

Good customer service is a must in any business that wants to not only survive but thrive within its industry. Good customer service means customer satisfaction. Ever been to a restaurant and the server never came to bring you a menu? Or have you waited in line for a bank teller only to have them close their window when it was your turn? These experiences left a bad taste in my mouth and it was all because the business lacked good customer service. Business should make customer service a company priority.

By providing good customer service in the logistics operation, such as the ability to track shipments and alert customers if their orders will be delayed, you will increase customer satisfaction. Tracking deliveries in real-time and communicating any issues which arise, alerts customers to problems and gives them time to make adjustments, such as finding an alternative source. Superior customer satisfaction and service sets your business apart from the competition and ensures customer loyalty.

Good customer service equates to a greater customer experience while they do business with your company. Poor customer service will drive people away from your brand. If a customer uses social media to inform others of your poor customer service, it can damage your brand’s reputation, which is hard to recover. However, an apology goes a long way. If something goes wrong, such as an order arrives late or a product is broken, quickly acknowledging the error and replacing the defective merchandise along with sending a sincere apology will deter any complaints and shows that your company cares for their customers. Showing you care through good customer service will do your business and your brand a world of good.

Showing respect, sending apologies, acknowledging errors and quickly fixing problems is what makes for good customer service. Improving efficiencies, such as in return processes and inbound shipments, will speed operations and deliveries to help you satisfy time-sensitive customers. Focuses externally on customers, putting their relationship first, helps to ensure customers will feel valued and want to continue working with your company.

In logistics operations, shippers establish KPIs to measure the performance of their carriers, such as the percentage of missed and on-time deliveries, loading and unloading times, truck turnaround times, etc. Using the performance data and actionable reports from a TMS, you can collaborate with carriers to identify how to address any issues that have arisen, especially issues that affect customer service. Focusing on improving your operations using KPI measurements and reporting keeps transport costs down, while increasing efficiencies, leading to greater customer service.

Since consumers today have heightened expectations about customer service, wanting their orders the same day and to know exactly when the order will arrive, businesses have to step up their game when it comes to improving customer service. Technology that gives visibility up and down the supply chain is the answer.

How Breaking Away from a 3PL Helped One Company Save 30% on their Freight Spend

Hyperline Cabling Systems, a company continuously striving to remain ahead of the curve, was dissatisfied with their third-party logistics provider (3PL) and recognized the need to regain control of their logistics operations by implementing a transportation management system (TMS).

In May of 2017, Hyperline made the switch to Kuebix TMS, making the Kuebix technology their logistics system of choice for their national distribution center in Buford, GA. Since implementation, Hyperline has been able to take control of their own supply chain and benefit from tremendous savings, increased flexibility and visibility, saving about 30% on their freight spend.

Hear what Otis Johnson, Warehouse Manager at Hyperline, has to say in the video below:

Customer Experience in the Age of E-Commerce

Customer Experience in the Age of E-Commerce

Retailers used to be able to lean on the stability of brick-and-mortar stores to provide a satisfactory customer experience. When a customer walked into a physical store, they knew exactly what to expect and were rewarded with instant gratification and the ability to take their purchases home the same day. Since the rise of the digital age, technology is shaping how customers purchase from retailers, and the customer experience is fundamentally different online.

According to Gartner, customer experience is defined as “the customer’s perceptions and related feelings caused by the one-off and cumulative effect of interactions with a supplier’s employees, channels, systems and products.” At a physical store, a retailer maintains control of the overall shopping experience by training staff, creating a pleasing shopping environment and streamlining the check-out process. With a digital store-front, retailers can only influence their customers’ experience through user-interface enhancements and supply chain improvements. This makes supply chain operations more important than ever.

Digital shoppers are expecting more and more from their online shopping experience. These final mile capabilities will help supply chains improve the end customers’ experiences:

Flexibility – Customers want the ability to choose the service type they need. Choosing the mode helps customers customize their experience.

Speed – Getting product quickly and when desired is becoming more important as 2-day delivery becomes standard. Designating when the product will arrive helps customers plan ahead and allows them to be more self-sufficient.

Tracking – Customers everywhere are demanding tracking capabilities. In order for customers to have confidence that their product has shipped and will arrive on time, a standard tracking feature needs to be implemented.

Alerts – In addition to tracking capabilities, up-to-date alerts keep customers’ expectations realistic when unforeseen events take place in the supply chain. Customers appreciate alerts to weather delays and other interruptions so that they can react proactively to late deliveries.

As e-commerce now makes up a total of 17% of all retail sales in the USA, retailers need to put their focus on improving their supply chains in order to win and retain business. According to EFT, “Today’s connected consumers demand both choice and flexibility when it comes to receiving their online orders – and will not hesitate to move loyalty if they encounter unsatisfactory delivery options.”

In order to keep customers coming back, technology needs to be implemented to offer customers choice and tracking capabilities. With the help of a robust transportation management system like Kuebix TMS, retailers can offer their customers this level of flexibility and control directly from their own websites. To read more about how Kuebix integrates with e-commerce and quoting platforms, click here.